Macrowikinomics : Thriving in the Age of Hyper-Transparency

By Don Tapscott and Anthony Williams

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This article is the fifth installment in series to be written by Don Tapscott and Anthony D. Williams, authors of the newly released book Macrowikinomics: Rebooting Business and the World. Mark Parker, the CEO of Nike calls it "A masterpiece. An iconic and defining book for our times." The Economist says it's a Schumpeterian story of creative Destruction."

The book argues that many of the institutions of the industrial age have finally come to the end of their lifecycle, and are now being reinvented around a new set of principles and a networked model.

Today's blog looks this new age of WikiLeaks and hyper-transparency

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The arrest of Julian Assange doesn't change the new reality faced by governments and corporations that have always craved secrecy. Even if Assange is put behind bars for an extended period, others will be happy to take his place. Think of the whack-a-mole game at the arcade. Hit one on the head and another will pop up.

The WikiLeaks episode is just a hint of the world to come. We are entering an era of hyper-transparency. Courtesy of the Internet, people everywhere have at their fingertips the most powerful tool ever for finding out what's really going and informing others. They are gaining unprecedented access to all sorts of information about governments, corporations and other organizations in society.

Assange has announced that WikiLeaks is going after private-sector corporations next, starting with the financial services industry. This will undoubtedly unleash a new round of whistleblowers keen to reveal what they see as evidence of duplicity and moral turpitude by their corporate masters.

But forced transparency goes beyond revenge by disgruntled employees. Customers can evaluate the worth of products and services at levels not possible before. Employees share formerly secret information about corporate strategy, management and challenges. To collaborate effectively, companies and their business partners have no choice but to share intimate knowledge. Powerful institutional investors today own or manage most wealth, and they are developing x-ray vision. Finally, in a world of instant communications, whistleblowers, inquisitive media, and Googling, citizens and communities routinely put firms under the microscope.

Overall this is a positive development. Whether you're a government or company, when you're increasingly naked, fitness is no longer optional. Survival will force you to get buff.

To be sure, all organizations have a right to secrecy. Companies have legitimate trade secrets. Transparency should refer to the release or exposure of pertinent information -- information that can help stakeholders if they have it or harm them if they do not. Employees should not violate confidentially agreements or the law as in the case of WikiLeaks.

But rather than defaulting to opacity as was done in the past, increasingly it makes sense to default to openness.

Consumer electronics retailer Best Buy has adopted the principle that "our customers should know everything that we know" including data about the defect levels of the products they are selling. CEO Brian Dunn says this is not just a matter of building trust but rather "customers have a right to this information."

Nike has decided to reveal information about its patents and through launching the Green Exchange shares critical environmental data so that other companies can benefit. Fedex has built transparency into its supply chain as the company has found that free and open flow of information reduces transaction costs.

Accenture CEO Bill Green has shocking candor with employees about everything from their financial performance to his personal struggle and tough decision to terminate the company's contract with Tiger Woods. "Transparency with employees builds trust; it speeds up the metabolism of collaboration and increases loyalty," he says. "Being open makes us better, and it's just the right thing to do."

Rather than something to be feared, transparency is becoming central to business success. Every company needs a transparency strategy. It has to rethink what new information should be made available to employees, customers, business partners and shareholders. Corporations that are open perform better. Transparency is a new form of power, which pays off when harnessed.

Embrace transparency as a force for good. It will result in high-performance business operations. Create good value because value is evidenced like never before. Embrace the principles of integrity, honesty, consideration and accountability as part of your organization's DNA. In doing so you can build trust -- the sine qua non of the networked world.

Don't confuse transparency with the lack of privacy. Transparency is an opportunity and increasingly an obligation for institutions. But transparency applies to institutions, not to individuals. Individuals have no such opportunity or obligation; they have a right to privacy. So while you're becoming more open as an organization become more scrupulous to protect the private information of customers, employees and other people who are stakeholders.

Much of this transparency argument also applies to governments. They are also becoming more open, which is good. Fifty years ago, few countries routinely released information about their economies. Indeed, many treated such information as state secrets. Now scores of countries post detailed economic statistics on the IMF's website.

A half-century ago, no country had laws specifically requiring government officials to provide information to their citizens. Now, nearly seventy countries do, and the number is still growing. Until as recently as the late 1990s, environmental regulation consisted largely of governments telling corporations what production processes to use. Newer regulations are increasingly about directing companies to tell the public the pollutants they are creating.

By throwing thousands of raw cables out in the open, WikiLeaks has invited the world to sift through the details and draw its own conclusions. Washington's elite may be discomforted by the notion that journalists and interested citizens alike can now hunt for embarrassing and perhaps even incriminating interchanges among diplomats. But in a world of hyper transparency, it turns out that many things including war and diplomatic relations will be subject to scrutiny.

Even the world's most ardent freedom-haters -- including the despotic regimes in countries like Burma and Iran -- cannot restrain the nascent forces of openness that are percolating in their societies. As the Iranian youth mobilization for freedom so vividly demonstrated, an explosive combination of youthful demographics and the spread of the Internet is helping oppressed peoples everywhere wrest open the authoritarian stranglehold that hangs over their social and economic destinies.

Smart companies and governments understand that becoming more transparent is in the best interest of the public.